Question

Wilmington Company has two manufacturing departments--Assembly and Fabrication. It considers all of its manufacturing overhead costs to be fixed costs. The first set of data that is shown below is based on estimates from the beginning of the year. The second set of data relates to one particular job completed during the year--Job Bravo. 10 Estimated Data Assembly $1,920,000 $2,240,000 80,000 32,000 Fabrication Total points $ 4,160,000 128,000 192,000 Manufacturing overhead costs Direct labor-hours 48,000 160,000 Machine-hours eBook Job Bravo Assembly Fabrication Total Direct labor-hours 17 26 Machine-hours 12 21 Print Required: 1. If Wilmington used a plantwide predetermined overhead rate based on direct labor-hours, how much manufacturing overhead would be applied to Job Bravo? 2. If Wilmington uses departmental predetermined overhead rates with direct labor-hours as the allocation base in Assembly and machine-hours as the allocation base in Fabrication, how much manufacturing overhead would be applied to Job Bravo? (Round your intermediate calculation to 2 decimal places.) References 1. Plantwide manufacturing overhead applied to Job Bravo 2. Manufacturing overhead applied from Assembly to Job Bravo 24 845 Manufacturing overhead applied from Fabrication to Job Bravo Total departmental manufacturing overhead applied to Job Bravo

Answer 1

Solution 1:

Predetermined plantwide overhead rate = $4160000/ $128000 = $32.50

plantwide overhead applied to Job Bravo = $32.50* 26 = $845

Solution 2:

Computation of departmental Overhead rate
	Assembly	Fabrication
Overhead Cost	$19,20,000	$22,40,000
/ Direct Labor hours	80000
/ Machine hours		160000
Departmental Overhead rate	$24	$14
Allocation of Overhead to Job Bravo
	Assembly	Fabrication
Direct labor hours	17
Machine hours		12
* Departmental Overhead rate	$24	$14
Allocated Overhead	$408	$168

Total = 408 + 168 = $576